Speaker 1: Hello, and welcome to another episode of the Add Thoughts Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe Wish. Joe, do we
Speaker 1: do we want Elon Musk to buy Twitter? At this point,
Speaker 1: I can't decide, Like I feel uncomfortable with the idea
Speaker 1: of him owning Twitter, given um, you know, the way
Speaker 1: he is, I guess, But then secondly, I really like
Speaker 1: I also want him to feel the full force of
Speaker 1: contract law and not get away with trashing the US
Speaker 1: legal system. Okay, my stance on this is I really
Speaker 1: like the way Twitter is currently run because it doesn't
Speaker 1: seem like it's a great business, but it has these
Speaker 1: positive externalities, like I get a lot of value out
Speaker 1: of it as a journalist, and it hasn't changed action.
Speaker 1: They haven't really ruined the product. So I like it
Speaker 1: the way it is, and I wanted to never evolve
Speaker 1: or improve or anything. And I'm worried, and I'm worried
Speaker 1: that if it's ever run like a really good business
Speaker 1: that it will be worse for me. And so I don't,
Speaker 1: you know, I don't care if it's Elon or anyone else.
Speaker 1: I just don't want anyone running it who actually like
Speaker 1: has some good ideas about how to fix it. Okay, Well,
Speaker 1: on that note, and without further ado, we are going
Speaker 1: to be talking about all of the thorny questions um
Speaker 1: thrown up by the Elon Musk Twitter saga, which is
Speaker 1: now devolved into a court battle. You know, it started
Speaker 1: stupidly with um D versus thirteen G stuff, and it
Speaker 1: seems like inevitably is going to end stupidly and in tears,
Speaker 1: in some sort of drawn out legal drama. So who
Speaker 1: do we call for legal drama? Who knows about Twitter
Speaker 1: and Elon? I don't know. Do we know anyone? Yeah?
Speaker 1: We do. Uh. Matt Levin is with us to talk
Speaker 1: about everything that's going on. Matt, thank you so much
Speaker 1: for coming back on all thoughts. Hey guys, it's it's
Speaker 1: terrible to be here. That's fair. That's fair. Um. Okay,
Speaker 1: let's start with the first question. Elon Musk backing out
Speaker 1: of the Twitter deal. I think Twitter stock is down
Speaker 1: something like since the deal was announced. Um, it was
Speaker 1: a forty four billion dollar offer back then it is
Speaker 1: not now? Is this just a tactic by Elon to
Speaker 1: try to get a lower price? I have no idea, man,
Speaker 1: I write about this every day and I have no
Speaker 1: visibility into the way his mind works. I mean, like
Speaker 1: a first level analysis here is that he's like an
Speaker 1: extremely whimsical guy. He whimsically wanted to buy Twitter, he
Speaker 1: got bored with it, and now he wants to walk away.
Speaker 1: That's my best guess about what's going on. And so
Speaker 1: he is not really looking to re cut a deal
Speaker 1: at a lower price. He's really looking to get out
Speaker 1: of it. Um, that's it. I mean, it is clear
Speaker 1: that one thing that changed between the time that he
Speaker 1: enthusiastically wanted to buy Twitter and the time that he
Speaker 1: wanted to get out of buying Twitter is that the
Speaker 1: market went down. You know, Twitter is a less valuable company,
Speaker 1: but also kind of more to the point, Tesla is
Speaker 1: a much less valuable company, and he was sort of,
Speaker 1: you know, going to pay for this out of like
Speaker 1: pocket change from selling a few Tesla shares, And now
Speaker 1: that is a somewhat more expensive proposition for him. And
Speaker 1: so it is like clearly the case that like economically
Speaker 1: this deal is worse for him, and if he recut
Speaker 1: the deal at a lower price, it would be more acceptable.
Speaker 1: But I don't know, I mean, like he's just going
Speaker 1: around trashing Twitter all the time, and it seems like
Speaker 1: that would not be a great strategy if you then
Speaker 1: wanted to close the deal, even at a lower price.
Speaker 1: All right, I we pride ourselves at odd Lots for
Speaker 1: asking the stupid questions that everyone else is afraid to ask.
Speaker 1: So I'm going to ask the big question that listeners
Speaker 1: will really appreciate. Uh. Someone finally saying out loud, what
Speaker 1: is a chancery? Why do they tell at the Delaware
Speaker 1: chancery courts? What is that word? Even me? God, I
Speaker 1: feel like I'm going to get this wrong. Um, so okay,
Speaker 1: So like here's here's like I went to I went
Speaker 1: to the school a long time ago. I'm gonna try
Speaker 1: to remember. I'm gonna do my best to remember. But now,
Speaker 1: so like in like old school, like English common law,
Speaker 1: and like you know, there were two things. There was
Speaker 1: a court of law and a court of equity, and
Speaker 1: like law was you know, this is not quite right,
Speaker 1: but sort of like intuitively law was like written sort
Speaker 1: of like clear law, and then equity was like wow,
Speaker 1: we do it's fair, and the world sort of evolved
Speaker 1: from then that distinction. You know, like there are not
Speaker 1: different courts like that in most of America, and the
Speaker 1: distinction between law and equity as a sort of like
Speaker 1: legal matter is like a little blurrier that it used
Speaker 1: to be, but people still talk about it. In Delaware,
Speaker 1: there remains a court of equity, which is called the
Speaker 1: Court of Chancery, and they do They have sort of
Speaker 1: a narrow set of jobs, but the main one is
Speaker 1: they do corporate law. So like all like murder, so
Speaker 1: every not every nineties something percent of like big US
Speaker 1: corporations are incorporated in Delaware and are subject to Delaware law,
Speaker 1: and most murder agreements are subject to Delaware. And so
Speaker 1: when there's a big dispute about a merger about corporate governance,
Speaker 1: generally it's usually in Delaware court, and it's in the
Speaker 1: Delaware Court of Chancery, which has like a handful of
Speaker 1: judges who are experts in business law. They also do
Speaker 1: some other stuff. I think they like the family Court
Speaker 1: or something. They have like some weird sort of set
Speaker 1: of cases. But like the one that you hear about
Speaker 1: is they do all the merger cases class action lawsuits
Speaker 1: and the judges no no class action well depends uh
Speaker 1: not securities class actions. They do like corporate law, Like
Speaker 1: there's a there's a kind of class actional they do,
Speaker 1: but like not not securities class actions, but they are
Speaker 1: you know, there's like a handful of judges and they're
Speaker 1: called chancellors. Actually they're called vice chancellor. Is one of
Speaker 1: them is the chancellor and they sort of develop the
Speaker 1: doctrine of of like when mergers have to close and
Speaker 1: stuff like that. So, how hard is it in this
Speaker 1: court to argue that there has been a material change
Speaker 1: or misrepresentation that should let you, in theory, get out
Speaker 1: of a deal, Like, are there any historical examples of that? Actually?
Speaker 1: Six eating So for so Musk is are you a
Speaker 1: couple of things? I mean, first of all, we're talking
Speaker 1: about this on Wednesday, July. Twitter has just sued Musk
Speaker 1: to close the deal. Musk has not filed any sort
Speaker 1: of reply in courts, So Musk is not really We
Speaker 1: probably should have mentioned so that in the intro that yes,
Speaker 1: last night, less than twenty four hours ago before recording this,
Speaker 1: Twitter did file this lawsuit against Musk forcing attempting to
Speaker 1: force him to close the deal. Yeah, so we haven't
Speaker 1: seen anything from from from Musk in courts, so we
Speaker 1: don't know exactly what his arguments are. But what we
Speaker 1: do have is his letter to Twitter terminating the deal,
Speaker 1: or I guess you should say, purporting to terminate the deal,
Speaker 1: and that lists his reasons why he thinks he can
Speaker 1: get out of the deal. One of them, as you say,
Speaker 1: is that there might have been or there might be
Speaker 1: a material adverse effect on Twitter. Famously, there's sort of
Speaker 1: been one Delaware court decision ever finding a material adverse effect,
Speaker 1: and there's sort of a rule of thumb that the
Speaker 1: Delaware chancellors used that like a sustained drop an income
Speaker 1: of like is a material adverse effect. Basically, the view
Speaker 1: is that it's a very high standard. And when one
Speaker 1: aspect of it is like when you say material adverse effect,
Speaker 1: there are a lot of things that don't count. So
Speaker 1: like the pandemic is carved out from m as the
Speaker 1: stock market going down is carved out. Things having to
Speaker 1: do with the deal are carved out. So like the
Speaker 1: fact that Elon Musk was going to buy Twitter probably
Speaker 1: drove away some employees and advertisers, but that can't count
Speaker 1: as an m A. The only thing that can count
Speaker 1: is basically, like the company itself blows itself up, and
Speaker 1: that's like an extraordinary high standard, and there's just there's
Speaker 1: just like not not a whisper of anything like that here.
Speaker 1: Now separately, he's arguing that like they have too many bots,
Speaker 1: and that you know, if they have too many bots,
Speaker 1: he can get out of the deal if that would
Speaker 1: cause an m A. Now, if you sort of take
Speaker 1: the maximal reading of Elon Musk's argument, you say, well,
Speaker 1: you know, Twitter has been lying for years to advertisers
Speaker 1: in the public. It has been selling stock and selling
Speaker 1: ads by saying that only five percent of its active
Speaker 1: users or bots, and really it's fifty and Twitter has
Speaker 1: known that for years and has been lying about it
Speaker 1: to perpetrate a massive fraud. I think if like proof
Speaker 1: of that came out tomorrow, then probably Twitter would lose
Speaker 1: a lot of business, and so it would like lose
Speaker 1: a lot of income and probably would getten a lot
Speaker 1: of trouble, which would also potentially be an m A.
Speaker 1: But when I say, there's no evidence of that, like,
Speaker 1: it's just it's like no one ever thought it until
Speaker 1: Ian must started pretending to think it. You know, there's
Speaker 1: not no evidence like that. It's just not in the
Speaker 1: realm of possibility. So that's probably not gonna work. The
Speaker 1: other thing that he's doing is he's arguing that Twitter
Speaker 1: has breached some of its covenants. It is like, promised
Speaker 1: to do things between the signing of the merger and
Speaker 1: the closing of the merger, and then it hasn't done them. Um.
Speaker 1: And the main one is that he's arguing that it
Speaker 1: hasn't given him all the information he wants about the bots,
Speaker 1: which is a slightly lower standard to get out of
Speaker 1: the deal for not providing the information. But it's still
Speaker 1: still feels hard to imagine it all work. The box
Speaker 1: thing is funny, and you wrote this in one of
Speaker 1: your call Okay, who knows exactly how many bots there
Speaker 1: are at Twitter? There's probably a lot, and you know,
Speaker 1: he must himself probably every one of his replies gets
Speaker 1: a thousand bots, which is why it maybe top of
Speaker 1: mind for him. But it's hard to see it like
Speaker 1: being material in part because, like, okay, advertisers by ads,
Speaker 1: and then they can see very directly, I think, how
Speaker 1: many you know, for every thousand dollars of ad spend,
Speaker 1: how much they get in revenue, and so in theory,
Speaker 1: like it's hard to see how that would be a
Speaker 1: major even if by some measure, there are way more
Speaker 1: bots on Twitter than its previously acknowledged. You still there
Speaker 1: is that r o I. It's like either you're getting
Speaker 1: revenue from the ads or not. And it's hard to
Speaker 1: see how like even if there was a way off
Speaker 1: on the bots number, how that would like really be
Speaker 1: changing the business much at this point. Yeah, basically the
Speaker 1: earthier I don't I don't know, Like I think like that,
Speaker 1: you know, to the extent there's some amount of like
Speaker 1: brand advertising on Twitter where like you're sort of not
Speaker 1: getting a direct like clicker eye than then. But but no,
Speaker 1: I agree with you, like, like the whole thing is absurd,
Speaker 1: Like there's no like it's just a fantasy that Ellen
Speaker 1: has concocted to try to get out of the deal.
Speaker 1: There's nothing, there's no real argument there. Can you talk
Speaker 1: to us a bit about the Twitter lawsuit because like
Speaker 1: a it's funny and it references a bunch of Musk tweets,
Speaker 1: but be like, my understanding is that there's a specific
Speaker 1: performance clause which gives Twitter the right to sue Musk
Speaker 1: to complete the deal as long as he has the
Speaker 1: debt financing. So talked to us about like what's possible
Speaker 1: under that, and could Musk like just try to scare
Speaker 1: away the banks or something at this point, like would
Speaker 1: that be a viable out for him if he said, like, oh,
Speaker 1: actually I don't have the debt financing lined up. The
Speaker 1: agreement says that if Twitter sues Musk for damages for
Speaker 1: preaching the agreement, they can only get a billion dollars,
Speaker 1: which is also the breakup fee that he agreed to
Speaker 1: pay if he walks away. So that's just not very
Speaker 1: much money, you know, in the context of a billion. Yeah,
Speaker 1: like it's a forty four billion dollar deal, and like
Speaker 1: I think if he walks away, like, you know, no
Speaker 1: one really knows, but the stock probably, you know, the
Speaker 1: company probably is worth you know, twenty billion ish, and
Speaker 1: so you're talking about like twenty plus billion dollars of damages.
Speaker 1: So the billion dollars of damages is just it's just
Speaker 1: not really compensation with Twitter. But as you say, the
Speaker 1: agreement says they can get specific performance. They can force
Speaker 1: Musk to close the deal. And there is some recent
Speaker 1: history of Delaware courts saying okay, you have to close
Speaker 1: the deal and forcing unwilling buyers to close mergers because
Speaker 1: they have no excuse for getting out of them. So
Speaker 1: that's very much a live possibility. Now, as you say,
Speaker 1: there are some conditions that you know, one is that
Speaker 1: like Twitter can't have violated its agreements, right, so maybe
Speaker 1: Must can wiggle out of this by saying it didn't
Speaker 1: give him enough information about the box. But the other
Speaker 1: one is that even if Twitter has done nothing wrong,
Speaker 1: Musk only has to close the deal if the debt
Speaker 1: financing is in place. So he has a thirteen billion
Speaker 1: dollar commitment letter from his banks saying that they will
Speaker 1: fund you know, thirteen billion dollars of Twitter debt to
Speaker 1: close the deal, and if the banks disappear then then
Speaker 1: he doesn't have to close. Can he blow that up?
Speaker 1: I mean I think that like, it's not it's committed financing,
Speaker 1: Like they have contractual obligations to him to fund. They
Speaker 1: don't have contractual obligations to Twitter. But there is precedent
Speaker 1: in Delaware for buyers, you know, having the same thought
Speaker 1: process and saying I'm gonna blow up my debts so
Speaker 1: I don't have to close the deal and blowing up
Speaker 1: their debt and the court saying the court of chancery,
Speaker 1: which is you know, a court of equity saying no, no, no,
Speaker 1: if you're blowing up your dat you know, intentionally, then
Speaker 1: we're not going to give you credit for that. We're
Speaker 1: gonna make you close even though your debt financing isn't
Speaker 1: in place. So deals with like the same language as
Speaker 1: as as what Mask has here, the court said, you
Speaker 1: know you're blowing up your debt doesn't doesn't work well.
Speaker 1: The other thing I'd say is like, you know, we're
Speaker 1: kind of early, honestly, like he has said he's terminating
Speaker 1: the deal, but like, you know, they haven't even had
Speaker 1: a share older vote, Like there's there's a lot like
Speaker 1: the debt financing was kind of early in in like
Speaker 1: getting done. It wasn't like they were like going out
Speaker 1: to market the debt. So one thing that Twitter is
Speaker 1: looking for here when they sue is they want to
Speaker 1: judge too, Like they can't have him. They can't order
Speaker 1: Musk to close the deal because it's just like they
Speaker 1: haven't had a share old vote yet. You know, it's
Speaker 1: not it's not ready to close yet. But what they
Speaker 1: can do is order Musk to try to get the
Speaker 1: debt financing. And if a judge says you have to
Speaker 1: cooperate with getting the debt financing, and if you don't,
Speaker 1: you'll be in contempt. Then it's somewhat harder for Elon,
Speaker 1: for even Elon Musk to blow up the debt financing.
Speaker 1: But also it's really hard for the banks to let him,
Speaker 1: Like if you're Morgan Stanley and it was like Elon's
Speaker 1: lead bank and a court says Elon, you have to
Speaker 1: cooperate with the financing. You don't want to go to
Speaker 1: court to be like, oh no, independently, we couldn't get
Speaker 1: this financing done. Also, I mean to be clear, like
Speaker 1: their finance thing, it's committed financing, like this is not
Speaker 1: not like a letter of being like that we'll do
Speaker 1: our best right like they've they've committed to fund a
Speaker 1: thirteen billion dollar financing, like there are conditions to it,
Speaker 1: but they're fairly minor, and like for the bank to
Speaker 1: walk away is going to be challenging. So just on
Speaker 1: this topic of like forcing the deal to go through,
Speaker 1: So I mean, part of me thinks, obviously you shouldn't
Speaker 1: be able to frivolously say that you are going to
Speaker 1: buy a company and then just like walk away from
Speaker 1: it and not go through with it. For not exactly
Speaker 1: great reasons. It's not good for markets and it's not
Speaker 1: good for society, so there should obviously be some punishment
Speaker 1: for that. But part of me is also like, is
Speaker 1: it weird to force people to do deals? Like what
Speaker 1: is the benefit of that forcing a company into the
Speaker 1: hands of an unwilling buyer? Like that also seems questionable,
Speaker 1: certainly when it comes to Twitter, which a lot of
Speaker 1: people would argue is like a platform for societal discourse,
Speaker 1: is a nice way of putting it, Like, how should
Speaker 1: we think about those two things? Yeah, it's really weird,
Speaker 1: so so look so like if you look back at
Speaker 1: the cases where this has happened occasionally, like there's a
Speaker 1: public company trying to buy another public company and there'll
Speaker 1: be an argument on specific performance, and the court will say,
Speaker 1: we'll sort of think about questions like how hard will
Speaker 1: it be to integrate these companies, which is like a
Speaker 1: weird thing for the court to think about, right, But
Speaker 1: if you're an unwilling public company buyer, you know, being
Speaker 1: forced to buy another company, you might care like will
Speaker 1: that be a disaster for the business? Right, But most
Speaker 1: of these cases are private equity firms, and there there's
Speaker 1: kind of like there's no integration. You know, there was
Speaker 1: a shareholder of a company, and now there's gonna be
Speaker 1: another shareholder of the company, and the shareholder will get
Speaker 1: the money from the company, but like nothing else needs
Speaker 1: to change. And so in some ways, it's actually like
Speaker 1: fairly easy to order a private equity firm to buy
Speaker 1: a company that doesn't want because it's just like an
Speaker 1: economic transaction, right, the private equity firm is going to
Speaker 1: try to maximize value it, you know, wished it would
Speaker 1: have paid a lower price. It's like still weird. It's
Speaker 1: weird to make someone buy a company they don't want,
Speaker 1: but like you're only making them buy it. You're only
Speaker 1: making them put up the money and then be like
Speaker 1: the you know, economic owner. You're not making them run
Speaker 1: at day to day Here, it's different, right, I mean,
Speaker 1: like he said that he was going to be the
Speaker 1: interim CEO of Twitter when he bought Twitter, right, and
Speaker 1: he's clearly like emotionally invested in Twitter in some weird way,
Speaker 1: and now he's clearly emotionally invested in trashing Twitter, and
Speaker 1: so yeah, making him run Twitter would be really bad.
Speaker 1: I mean, I don't know, maybe would be great, but
Speaker 1: it seems like it would be really bad for like Twitter, right,
Speaker 1: for Twitter as a platform and as a public utility,
Speaker 1: and certainly for the employees. And it seems like it
Speaker 1: would probably be bad for him like personally, right, Like
Speaker 1: he's a human being who would now be in charge
Speaker 1: of like running this company that he claims to not
Speaker 1: want to run it, Right, Your punishment for backing out
Speaker 1: of the deal is that now you have to run Twitter, yeah, right,
Speaker 1: which like is a terrible punishment, but um, so yes,
Speaker 1: I agree. It's it's weird and it's in some way
Speaker 1: unprecedented because like the precedents are about like sort of
Speaker 1: more like rash economic actors, and this is like a
Speaker 1: deal about like you know, an angry man buying a
Speaker 1: social media company. If I were in charge, like let's
Speaker 1: say if I were the Delaware judge, and I said,
Speaker 1: he has no excuse for getting out of the deal,
Speaker 1: which is what I think now, Like we'll see what
Speaker 1: his filing say, but like, as of right now, it
Speaker 1: looks like it looks to me like he has no
Speaker 1: excuse for getting out of the deal. If I were
Speaker 1: the Delaware chanceller, I would say, look, I would like
Speaker 1: call a conference and I'd say, look, I'm going to
Speaker 1: order a specific performance. Musk has no excuse for getting
Speaker 1: out of the deal, and I'm going to order him
Speaker 1: to close the deal and he doesn't want that, and
Speaker 1: Twitter doesn't want that, and frankly, I don't want that
Speaker 1: because I'm a Twitter user. So work something out, man, Like,
Speaker 1: the only good outcome here is a settlement where Musk
Speaker 1: gives Twitter enough money that they don't feel so bad
Speaker 1: about letting the deal go away, and where he doesn't
Speaker 1: have to pay the forty four billion dollars and run
Speaker 1: Twitter all day. Right, So if he pays them, you know,
Speaker 1: he writes them a big check and they all agree
Speaker 1: to forget about it, then that seems like the best
Speaker 1: of the bad outcomes here. And the only way he
Speaker 1: does that is if he knows that the alternative is
Speaker 1: like a certainty of him being forced to pay forty
Speaker 1: four billion dollars and by Twitter. Let me ask you
Speaker 1: a question, not about the text of the law, but
Speaker 1: the practice of the law. Okay, so I've read a
Speaker 1: lot of matt Levine columns. It looks like must arguments
Speaker 1: are very bad. Twitter filed this lawsuit yesterday, uh and
Speaker 1: everyone basically said, wow, this is they have a dead
Speaker 1: decides with this. Do Musk's lawyers enjoy this? Do they
Speaker 1: live for this? Is this fun for them that they're
Speaker 1: now tasked with? Like, well, how do we find an
Speaker 1: argument that will like maybe hold up and find some
Speaker 1: precedent that everyone had forgotten about that's in like some
Speaker 1: dusty old book or something like is this energizing for them?
Speaker 1: Would you? Would you find it enjoyable having been a
Speaker 1: lawyer yourself? Would you enjoy being um must legal team?
Speaker 1: Right now? I thought you were going to ask Matt
Speaker 1: like what would be his strategy if he rejoined? Maybe
Speaker 1: tell Lipton to like defend Twitter? But you've got the
Speaker 1: other way and you've asked him Like how sheems like
Speaker 1: defending Twitter is easy? Like everyone agrees the laws full
Speaker 1: on the side, Like it doesn't actually seem that, like
Speaker 1: the Twitter lawyers have a tough case to make. We'll
Speaker 1: see what happens. But it doesn't seem like this is
Speaker 1: a particularly everyone's saying. It's like there's kind of a
Speaker 1: kind of a tappen for a putch, So like would
Speaker 1: it be fun to be on the Musque defense team
Speaker 1: in this situation? So their best argument is that he
Speaker 1: has not given them that Twitter has not given him
Speaker 1: the information he's requested bots. Now, I think we all
Speaker 1: agree that the idea that there are so many bots
Speaker 1: that the Twitter that like Twitter is not a functioning business,
Speaker 1: is like insane and so that's not gonna work. But
Speaker 1: he's been asking for information about bots, and he says
Speaker 1: they haven't given him all that he wants. Now there's
Speaker 1: some debate about like they've given him a lot, and
Speaker 1: like he's been asking for unreasonable things, but like, you know,
Speaker 1: that's that's all subjective and you can sort of make
Speaker 1: noises about how he's actually been asking for reasonable things.
Speaker 1: And the nice thing is that, you know, the thing
Speaker 1: about the bots that is crazy, that is like crazy
Speaker 1: making and hypocritical, is that when Musk signed the deal,
Speaker 1: he was like, I'm going to defeat the bots, right,
Speaker 1: Like he's made it clear from day one that he's
Speaker 1: aware that Twitter has bots and he's really mad about them.
Speaker 1: And so that undermines his case that like, oh, I've
Speaker 1: discovered there too many bots. I have to walk her
Speaker 1: from the deal. But it actually helps his case that
Speaker 1: he wants information about the bots, because he's like, look,
Speaker 1: I'm going to be running Twitter. I need to know
Speaker 1: about how to fight the spam bots, and Twitter is
Speaker 1: not giving me any of that information, which makes me
Speaker 1: think that they're hiding something from me, and that makes
Speaker 1: me want to walk away from the deal. I don't
Speaker 1: think that's a good argument, but I think it's like
Speaker 1: an argument that you could sort of, you know, gulp
Speaker 1: and make as a I don't know, do your question, Like,
Speaker 1: I don't know, I've never been a litigator. I think
Speaker 1: it is hard to I think that this feels like
Speaker 1: a like a case where you're like, this is really
Speaker 1: I have to say this, but it was like the
Speaker 1: richest guy in the world literally yeah, and like you know,
Speaker 1: they are in the poor associate it, so you're going
Speaker 1: to get waken up, woken up at like two am
Speaker 1: in the morning because Musk tweeted something that might be
Speaker 1: real that would be true if they had a good
Speaker 1: case to write. I mean, like they have a tough case,
Speaker 1: but like, yeah, they're there. They have professional pride and
Speaker 1: crafting arguments that are you know, colorable and not like
Speaker 1: openly dishonest, like you know, like they can't say things
Speaker 1: that are false. They have to be honest. But I
Speaker 1: think that like, is there is there something you can
Speaker 1: argue here, Yeah, I think like you can argue that
Speaker 1: they have asked for information and they haven't gotten it,
Speaker 1: and they deserve to have that information. I don't think
Speaker 1: that's a crazy argument to make. And I think, you know,
Speaker 1: we'll see what happens with the dead financing. That that's
Speaker 1: like that's like a possible avenue for getting out of
Speaker 1: specific performance. I also think that, like, you know, like
Speaker 1: the other thing that the other argument I would make
Speaker 1: probably a fire musclers, is like, look, specific performances, as
Speaker 1: they say, an equitable remedy, right, Like, you can't just
Speaker 1: automatically get specific performance. Even if you think Musk is
Speaker 1: like in the wrong here and Twitter is in the
Speaker 1: right about everything, you still shouldn't order specific performance because
Speaker 1: just like Tracy said, like like no one wants him
Speaker 1: to own Twitter, right, like like that's that's the sort
Speaker 1: of like weird fact here that his novel, which is
Speaker 1: that it would be really mean to Musk, to Twitter's users,
Speaker 1: to Twitter's employees to make him actually own the company.
Speaker 1: And so like that could be an argument you could
Speaker 1: make to try to get out of that consequence. Okay,
Speaker 1: just on the topic of Musk and his tweets like
Speaker 1: this is one of the things that made the Twitter
Speaker 1: lawsuit quite entertaining. They embedded a bunch of Musk's own tweets,
Speaker 1: including like ones with a poop emoji in them and
Speaker 1: things like that, how much does what Musk himself has
Speaker 1: said about the deal and his motivations? And you know,
Speaker 1: he had like one meme where he sort of seemed
Speaker 1: to imply that this whole thing was just a way
Speaker 1: to get Twitter to have to disclose more information about
Speaker 1: the thoughts in court, Like how much does that play
Speaker 1: into this? I think the main way, like a judge
Speaker 1: is ultimately going to have to sit down and say
Speaker 1: is it fair to order a specific performance like what's
Speaker 1: like the legal the lawyers would say the balance of
Speaker 1: the equities, like, even if Musk is preaching the agreement,
Speaker 1: is it really a good ide to force him to close?
Speaker 1: And I think that Twitter strategy here is to say, look,
Speaker 1: the angrier the judges at elon Musk, the more likely
Speaker 1: the judges to order him to close the deal. And
Speaker 1: his really just like public thumbing his nose at the
Speaker 1: sanctity of merger agreements is going to annoy a Delaware judge,
Speaker 1: right because like the Delaware judge is in the business
Speaker 1: of making Delaware a predictable place to do business and
Speaker 1: a place where merger agreements are predictably enforced. And when
Speaker 1: a guy was like I don't care about merger agreements,
Speaker 1: like that's going to annoy it Delaware judge, and like
Speaker 1: showing the tweets is gonna kind of drive that home.
Speaker 1: I hadn't thought about that angle, which is that if
Speaker 1: you know, if if that there is a sort of
Speaker 1: Delaware consequence if they go too far outside of norms,
Speaker 1: which sort of undermines the entire point of having all
Speaker 1: this like corporal law done in their courts. But I
Speaker 1: just have like, actually have two very short questions related
Speaker 1: to the Delaware courts. I think I saw maybe it
Speaker 1: said it was in the Twitter lawsuit that they think
Speaker 1: it can be a four day trial, Like can do
Speaker 1: Delaware courts? Can they really move that fast? Yeah? In general,
Speaker 1: Delaware courts are in the business of doing trials on
Speaker 1: merger cases, like in order to close murders quickly, Like
Speaker 1: this isn't probably a case for damages, right, this isn't like,
Speaker 1: you know, we drag this out for five years and
Speaker 1: do a lot of discovery, right, everyone knows all the facts.
Speaker 1: First of all, right, like the facts are fairly straightforward.
Speaker 1: And secondly, like, you know, the thing they're looking for
Speaker 1: is like you got to close the deal, right, So
Speaker 1: like they're not gonna wait five years to is the
Speaker 1: deal right? Like like Della records move fast in like
Speaker 1: merger disputes and like and again like you know, Delaware
Speaker 1: is in the business of doing this right, Like it's
Speaker 1: very important to Delaware that mergers be predictable and they
Speaker 1: close on time. And so when someone's trying not to
Speaker 1: close a merger and someone else is trying to get
Speaker 1: it closed, they're like, Okay, we'll do a quick trial
Speaker 1: and and we'll give you an answer. You know. It's
Speaker 1: it's it's like that that's the business that right, that's
Speaker 1: the that's the that's the whole point of Delaware. So
Speaker 1: last question is uh, and I think you wrote about
Speaker 1: this like is there a world in which there could
Speaker 1: be criminal Like let's say it's like, yeah, you've got
Speaker 1: to close this deal. There's no you know, no question
Speaker 1: and must like still doesn't want to in the world
Speaker 1: of like infinite possibilities, is there a world in which
Speaker 1: that could lead to his arrest and imprisonment. I've joked
Speaker 1: about tensory jail. There's there's there's one time ever when
Speaker 1: a Delaware chancellor like ordered someone arrested, but it was
Speaker 1: not over a merger. I mean, I don't know, fanciful
Speaker 1: like this it weird. You know, the world is weird
Speaker 1: because it's Elon Musk. Because he likes so blatantly thumbs
Speaker 1: his nose at authority. People did sort of immediately jump
Speaker 1: to the question of, like what happens if it judge
Speaker 1: says okay, you have to close this deal and must
Speaker 1: says no. What does the court do? Do they order
Speaker 1: him arrested? You know, I don't know the answer. I
Speaker 1: mean I think, like, I think the court holds him
Speaker 1: in contempt. I think if he stays in Texas, I
Speaker 1: think I don't I'm here, I'm speculating. I don't think that,
Speaker 1: like the first order of business is for like a
Speaker 1: Delaware chancellor to try to get him extradited to Delaware
Speaker 1: to go to a Delaware jail. I think there are
Speaker 1: other things you can do. Weird things happen. I think
Speaker 1: there are other things you could do. Is a Delaware
Speaker 1: tesselor like for instance, can you try to see some assets? Well,
Speaker 1: I don't know, but like you know, one question is like,
Speaker 1: does he have any assets in Delaware? I doubt he
Speaker 1: has like a big mansion in Delaware, but you know
Speaker 1: what he has in Delaware? Maybe hundreds of billions of
Speaker 1: dollars of Tesla Stock, which is a Delaware corporation. So
Speaker 1: can they seize that? I don't know, man, But like
Speaker 1: I think that if they order him to close and
Speaker 1: he just ignores the court, I don't really know what
Speaker 1: levers they have to make him do it, but I
Speaker 1: think they probably have some. I think that putting him
Speaker 1: in a jail in Delaware it's probably pretty low down
Speaker 1: on the list, But I don't know. Alright, Matt, Well,
Speaker 1: we could go on about this for hours, obviously, and
Speaker 1: we probably will, unfortunately, have a chance to talk about
Speaker 1: it again at a later date. But thank you so
Speaker 1: much for coming on odd thoughts and explaining just how
Speaker 1: surreal everything is at the moment. It's pretty weird. And
Speaker 1: looking forward to reading all of your many do you
Speaker 1: do you dream about it? Has he been in your
Speaker 1: dreams yet? Because you're like the third character of this story,
Speaker 1: it's like dreams, it's more than like I am like
Speaker 1: missing sleep to like set up my computer and type.
Speaker 1: I don't think I've actually agreamed about it the world.
Speaker 1: The world appreciate your your service man, and we appreciate
Speaker 1: you coming on the show. That's right. So clearly a
Speaker 1: lot of weirdness there and a lot of open ended
Speaker 1: questions about what might happen. But I feel like, I
Speaker 1: don't know, like a I just feel like there's a
Speaker 1: lot of stupidity. But be like part of me, part
Speaker 1: of me, really likes Musk making the point about Twitter bots,
Speaker 1: but the other part of me thinks maybe he shouldn't
Speaker 1: make that point by completely trashing the US legal system.
Speaker 1: You know, I hadn't thought about that point, But I
Speaker 1: do think that was really a good point that Matt made,
Speaker 1: which is that, like the whole reason so much corporate
Speaker 1: law is done in Delaware, it's like it's quick, it's predictable,
Speaker 1: the rules are like fairly unambiguous, and you know, everyone
Speaker 1: sort of likes that, which does make it seem like
Speaker 1: it even raises the bar further, the fact that like
Speaker 1: Musk seems to be thumbing his nose so much at
Speaker 1: the contract law, like if that's allowed and endorsed by
Speaker 1: a Delaware court. Then what the point of a Delaware
Speaker 1: court Again? I don't know, Like maybe his lawyers are
Speaker 1: gonna like pull something that really is like changes our story,
Speaker 1: and lawyers are really good at doing that. But yeah,
Speaker 1: like this sort of the whole system is implicitly on
Speaker 1: trial almost. Yeah, And also like I just the idea
Speaker 1: that the ultimate punishment for Elon Musk might be having
Speaker 1: to become CEO of Twitter, And like I just have
Speaker 1: this image of like a judge somewhere like standing behind
Speaker 1: Elon Musk while he sits at a desk doing like
Speaker 1: Twitter things and finding the bots and just forcing him
Speaker 1: to do it. There's this whole thing is very strange. Uh,
Speaker 1: lots of future Matt Levine columns to read at a
Speaker 1: very minimum. Shall we leave it there. Let's leave it there.
Speaker 1: This has been another episode of the All Thoughts podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway and I'm Joe wisn't Thal. You can follow
Speaker 1: me on Twitter at the Stalwart. Follow our guest Matt
Speaker 1: Levine on Twitter. He's Matt Underscore Levine, and of course,
Speaker 1: subscribe to his newsletter Money stuff that you can not.
Speaker 1: He is a link to it at his handle. Follow
Speaker 1: our producer Kerman Rodriguez at Kerman Arman and check out
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Speaker 1: Thanks for listening.